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Home > Mortgages > Mortgage Data

CML sees Q2 buy-to-let lending up by 5%

Buy-to-let lending has increased as landlords rush to cash in on cheap mortgages and rising rental yields, figures from the Council of Mortgage Lenders have found.

By Julia Bradshaw | Published Aug 15, 2012 | comments

According to the data, the second quarter of this year saw lending grow by 5 per cent on the previous period, as lenders advanced 33,200 loans worth £3.9bn.

Year-on-year, the volume of loans in the buy-to-let market was up 14 per cent and value rose by 18 per cent.

Paul Smee, director general of the CML, said buy-to-let lending was recovering from a low point in 2009, when just 88,500 mortgages were advanced in the year. However, lending volumes still remain below their peak in 2007 of 346,000.

Mr Smee said: “Buy-to-let is growing broadly in line with expectations. The rental sector has grown strongly over the last decade or so, and buy-to-let continues to help deliver a wider choice for tenants.”

The average maximum loan-to-value available on buy-to-let mortgages remained at 75 per cent, with average minimum rental cover at 125 per cent. Both have been broadly unchanged for the past three years.

The data showed a slight improvement in the performance of buy-to-let loans, with the proportion of borrowers more than three months in arrears falling to 1.56 per cent, from 1.69 per cent at the end of the first quarter.

The proportion of buy-to-let properties taken into possession was unchanged at 0.12 per cent, while in the owner-occupied sector the data showed a small fall to 0.07 per cent from 0.08 per cent.

John Heron, managing director of specialist lender Paragon Mortgages, said: “The figures released by the CML show a positive rise and demonstrate the continuing growing confidence in the market.”

In separate data from the CML, repossessions fell in the second quarter, while arrears remained flat.

There was also a small increase in mortgages with arrears of more than 10 per cent of the balance.

Mr Smee said: “The figures show that lenders, borrowers and debt advisers are working together to get through economic difficulty and keep mortgage possessions in check. It’s essential for anyone worried about a mortgage to talk to the lender.”

Charles Haresnape, managing director of Aldermore Residential Mortgages, said: “CML data reveals that the buy-to-let market continues to grow. This trend is likely to continue as the lack of purchase deposits and weak consumer confidence continues well into 2013.”

Brian Murphy, head of lending for national intermediary Mortgage Advice Bureau, agreed the trend in buy-to-let would continue to gather pace.

However, he added: “We will eventually reach a ceiling for rental growth, as rates have been rising and can’t keep going up indefinitely.”

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